By Tami Siewruk

Anyone who knows me, including our long-time subscribers, can attest that “concessions” is practically an expletive in my vocabulary.  Choosing whether or not to offer concessions is often not a decision you or a supervisor makes rather it is one that the market dictates due to the fact that other communities made the decision and therefore forcing your community to follow suit.
The whole reason why companies and communities offer concessions or incentives is to gain a competitive advantage, right?  So, let me ask you this… if everyone in the market is offering concessions, then where’s the advantage?  It only puts us all right back where we started, on a level playing field.  We all end up giving away the moon rather than educating our prospects and residents, and playing the never-ending game of one-upsmanship that some of us have been trapped in. Ok, Ok I’ll stay off that soapbox, it just drives me mad! Anyway, concessions are one of those things that work well in theory, but actually create a world of, well, concessions.

If you find your community in a concession situation, as many markets are today, I hope you’ll take the time to consider these factors with an eye for the “big picture”.  Believe it or not there is a sensible approach to the issue of offering concessions .

So if you find that  community occupancy is falling below a profitable level, or you find yourself with more supply than demand, perhaps this common-sense approach will help you as much as it helped me!

Review the Overall Picture

1.    Meet with the entire staff, and ask for feedback from everyone on what they feel is happening.  (Actually, you should do this regularly anyway, whether you perceive a problem or not.  Some of the best and most practical insight comes from your “front line”.)
2.    Have your entire staff shopped along with your top three competitors. Use a third party independent company so that you’ll be able to compare the whole apartment shopping experience from your prospects’ perspective, and make adjustments if needed.
3.    Meet with the staff again.  Review the shopping reports together, make the necessary adjustments, and arrange for one-on-one training where it’s needed.  In a few cases, we found that our staff was doing a great job, and our prospect’s experience in shopping our community was great, if not better than our competitors.
4.    Review each floorplan independently, and consider its pricing carefully.  Make any necessary adjustments to the rent based upon the floorplan’s strengths, weaknesses, and competition within the marketplace (compare your floorplans to your competitors’ similar floorplans and pricing).  In other words you need to do a side-by-side, floorplan-by-floorplan comparison of your community versus your competitors’ floorplans.  Jennifer Nevitt of Bravo Strategic Marketing created a comprehensive and widely used method for doing exactly this.
5.    Walk all of your floorplans with a critical eye for weaknesses.  Create a training list with tips and techniques for overcoming objections and selling the strengths of each floorplan as compared to the competition.
6.    In existing communities, I would also take the “less desirable” locations and floorplans and determine if there is anything within budget that we could do to improve the interiors.  I’ve used this technique repeatedly with great success.
7.    Create / evaluate the model.  We completely upgraded our model with added crown molding, optional paint color, special plumbing fixtures, special lighting fixtures and ceiling fans, closet organizers etc.  In other words, we dressed the model up with all of the added options that were available for our residents to choose from.  This showed our prospects what they could do with the apartment home if they chose to.  We priced each option by adding only a 15% mark-up to our cost.  Five percent of the mark-up is given to the leasing professional who sells the upgrade, and the additional 10% is administrative income.  We call this our “Custom Home Apartment™.  Note: Use plumbing fixtures that are in keeping with the brand in the community so you don’t have seat and “O” ring issues.
8.    Photograph the entry of your community and your competitors’, and compare them.  Make yours more inviting.
9.    Look at your advertising.  How does it stack up against your competitors?  Do you sound different?  What do you offer that they don’t?  Are you advertising the floorplan with the highest availability?  Are you showing both photos of your community and lifestyle photos too, or are you showing the same thing as the competition? Keep in mind that it is very difficult to have a good interior shot that actually sells.
10.    Have you tried offering an incentive (i.e. a washer/dyer, ceiling fan, or upgraded fixtures).  The best incentives are stay with the community long after the resident is gone, and create added value in the long run.
11.    Pull your last two weeks worth of guest cards, and call each and every one.  Tell the prospect that you’re conducting a third-party audit of the apartment shopping experience, and need to ask them three quick questions.  Promise that you won’t take more than a couple of minutes of their time.  The questions we ask are: 1. Have you made a decision on where you are going to move, and if so, why did you select that community?  (If they say that they’ve chosen your community, communities, thank them, and move on to the next person.)2.  Did you visit _________ apartments (your primary competitor), and if so what did you think about the community? Don’t be surprised if you find that who you consider a competitor really isn’t. 3.  Is there a specific reason why you’ve decided not to lease there?
12.    Have you determined if you have a leasing problem or a marketing /advertising problem?
13.    Have you strengthened your resident retention program?
14.    You must WORK your renewals. Remember that residents today are not only smarter (the industry has given them a good education) and knowledgeable about market conditions. They see the competitor’s signs. Don’t let them get taken away by an offer that’s too good to be true. In really competitive markets ( I dislike this so much but…) you not only have to give them an education on the cost of moving but you may need to offer them the same concession as people moving in, just to keep them. I have found that an open, honest conversation is the best approach.  One last comment on renewals, Have you considered returning security deposits if they have been a resident in excellent standing for 2 or more years, have completed an apartment inspection and  renew their lease?
15.    You never have truly know whether or not you  could have leased-up without concessions if you didn’t try to do it before offering concession if you simply follow suit;
16.    Your staff is a powerhouse of product knowledge!  If you have followed the approach above they’re  more educated than ever before about their product and their competition;
17.    Your competitors need to learn that you don’t offer concessions as standard practice, and that when you do, your doing it because they have forced your hand! We all know that price fixing is illegal but if your competitors learn that your company/community doesn’t  give concessions as a standard practice ( a crutch for poor leasing and marketing) they just might reconsider and not jump to concessions as a standard practice. Call all your competitors and offer to fax or email you rental rates and concession packages to them weekly in exchange for them doing the same thing.
18.    If you have to give something away, ask for something in return.  Along with the free rent, ask the resident to sign a paying lease term of either six months or one year.  In other words, their free rent period, although covered under the lease, should not be included when the lease term was calculated.  For example: with one month free rent, the lease term should be 13 months.  This will enable you to get a full year collection of rent without increasing your operating expenses the next year.  If you don’t do this, (as you may be aware), your turnover expenses are divided into 11 months instead of 12, so the concession actually costs you more than a months rent.
19.    Cover your bases.  As even further protection, ask the resident to sign a concession agreement, stating that if their lease is broken for any reason, the entire amount of the concession is due and payable.  Where the lease terms and conditions are met, there is no liability.
20.    Sometimes it makes sense to spread the concession over the first six months of the lease.  I have not used this method, but I have heard of many companies that have used it with great success.  I think it’s a great idea, where the market is receptive to it.  Because if you decided to offer concessions in order to be competitive, you have to consider that part of your competitive edge involves how and when the concessions are delivered.  In some cases you’ll find, the market is the most receptive to a one-time offer; and you’ll find this to be true in many areas where residents view the concession as a welcome means of offsetting moving expenses – but I think the six month idea is a great one if you can pull it off.
21.    You really can increase rents even though you are offering concessions.  In fact, it’s probably easier to increase rent in some places, where the market is focused on the short-term benefit instead of the long-term effect. This rings especially true when you are offering the better product.  I have heard of an apartment community in Dallas that leased 100 plus apartments (70%) in two months by giving away 1.5 months rent.  Unfortunately, they didn’t increase the rents while doing it, not to mention that they weren’t under the gun because they didn’t even have the apartments out of construction yet.  Don’t miss the opportunity to raise rents when offering concessions, whenever you can do so sensibly.
22.    Before you make the decision to  offer the market standard for example  one-month free on a one-year lease(13 months), and 2 weeks on a 6-month lease. You may want to test using the dollar amount such as I have. For example: Try $500 on a 6-month lease and $1000.00 on a one-year lease (which is less than a half a months rent and a months rent, respectively).
23.    Only offer concessions on floorplans with the highest availability.  In addition, and this is key, continue to adjust your rents upward as you lease apartments. Remember that in many market conditions people are looking for the short-term benefit instead of the long-term effect.
24.    Consider a graduated rent level depending on the date the moves in date. For example: The apartment is ready for move in on April 1, if the resident moves-in the first week it rents for $100.  If they move in the second week it would rent for $110. I have never used this approach myself but have heard of several communities doing this with great success.
25.    Establish a rotating bonus plan based upon leasing certain apartment types.  For example, “All A-1’s leased this week are bonused at $100!”  I typically select the apartments that have either been vacant the longest or have the highest availability. Establish team goals with bonus incentives.  Any opportunity to foster teamwork is too valuable to pass up!
26.    Provide weekly articles of interest that focus on dealing with concessions, over coming objections, closing and follow up.  I email our communities a new article every Monday morning.  Keep the tone encouraging and motivational.

If you’re caught in the concession trap, or have to  give in to it, please take the time to consider the HOW, WHAT, WHEN, and WHY of it all before you follow your competition over the rail of that proverbial bridge!  Depending upon your own unique situation, there is  an economically sensible approach to offering concessions.

This article is being republished for Alicia and Derek.

Special Note to Alicia and Derek: When you have no availability in your one-bedroom apartments, it's time to increase the rents. One of the biggest issues I see with apartment communities across the country is that they treat community occupancy as a whole when they should be focused on apartment-type occupancy and availability. Rents on a one-bedroom can be higher than on a two-bedroom!  I have achieved this with success!

I wrote an article a while ago that addressed the issues of offering concessions.  Actually, it was more of a rant, but you can believe that I meant every single word of it.  The truth is that at the time, I was face to face with a tough decision to toss my convictions aside and offer concessions at McNeil House (the first apartment community I built, 193 units in Austin Texas), or continue receiving only three or four new leases per week, while around twenty new apartments per week were completing construction and ready to lease!

Anyone who knows me, including our long-time subscribers, can attest that “concessions” is practically an expletive in my vocabulary.  Choosing whether or not to offer them in my very own community was probably the toughest decision I’ve had to make as a developer – well, the second toughest.  The toughest was whether or not to build in the first place!

The fact that I had to approach the issue from all angles, or even approach the issue at all instead of dismissing it without a second thought, opened my eyes a quite bit to the many factors involved.  Now, don’t get me wrong – I’m still up on my same old soapbox.  Concessions are NOT the answer to your occupancy problems.  The whole reason why companies and communities offer concessions or incentives is to gain a competitive advantage, right?  So, let me ask you this… if everyone in the market is offering concessions, then where’s the advantage? It only puts us all right back where we started, on a level playing field.  We all end up giving away the farm rather than educating our prospects and residents, and playing the never-ending game of one-upsmanship that some of us have been trapped in since time immemorial. Concessions are one of those things that works well in theory, but actually creates a world of, well, concessions (I was going to use a four-letter word there, but the one I used is worse).

Hey, I understand that there’s something to be said for a level playing field, but remember when Mom used to ask, “If all of your friends jumped off of a cliff, would you do it too?” Mom was giving you some amazingly valuable marketing advice there, and you didn’t even know it.  My experience with McNeil House has given me a much clearer understanding of the facts that have to be carefully considered where the concessions issue is concerned.  If you find yourself in a similar situation, I hope you’ll take the time to consider these factors with an eye for the “big picture”.  I had to think, and rethink the issue before making my final decision, and I’ll let you in on all the factors that I considered and the steps that I took to sensibly approach the issue of offering concessions.  Next, we’ll discuss my final decision, and the results we received.  We’ll answer the important questions: Would I do it all over again?  What would I change? What did Lori (the community manager) have to say?

If your community occupancy falls below a profitable level, or you find yourself with more supply than demand, perhaps this common-sense approach will help you as much as it helped me!

Review The Overall Picture

• Meet with the entire staff, and ask for feedback from everyone on what they feel is happening.  (Actually, you should do this regularly anyway, whether you perceive a problem or not.  Some of the best and most practical insight comes from your “front line”.)
• Have your entire staff shopped along with your top three competitors. Use a third party independent company so that you’ll be able to compare the whole apartment shopping experience from your prospects’ perspective, and make adjustments if needed.
• Meet with the staff again.  Review the shopping reports together, make the necessary adjustments, and arrange for one-on-one training where it’s needed.
• Review each floor plan independently, and consider its pricing carefully.  Make any necessary adjustments to the rent based upon the floor plan’s strengths, weaknesses, and competition within the marketplace (compare your floor plans to your competitors’ similar floor plans and pricing).   In other words you need to do a side-by-side, floor plan-by-floor plan comparison of your community versus your competitors’ floor plans.  Jennifer Nevitt Casey of Bravo Strategic Marketing has created a comprehensive and widely used method for doing exactly this.  Jennifer shared her system for comparatively rating floor plans. Jennifer and I also worked together to create the ultimate evaluation tool!  NOTE: Alicia and Derek Read The Finer Points of Floor plans I am tracking this down so I can post it for you both.
• Walk all of your floor plans with a critical eye for weaknesses.  Create a training list with tips and techniques for overcoming objections and selling the strengths of each floor plan as compared to the competition.
• In existing communities, I would also take the “less desirable” locations and floor plans and determine if there is anything within budget that we could do to improve the interiors.  I’ve used this technique repeatedly with great success.
• Create / evaluate the model.  We completely upgraded our model with added crown molding, optional paint color, special plumbing fixtures, special lighting fixtures and ceiling fans, closet organizers etc.  In other words, we dressed the model up with all of the added options that were available for our residents to choose from.  This showed our prospects what they could do with the apartment home if they chose to.  We priced each option by adding only a 15% mark-up to our cost.  Five percent of the mark-up is given to the leasing professional who sells the upgrade, and the additional 10% is administrative income.  We call this our “Custom Home Apartment™.  Several companies, including ZOM Residential and Post Properties have used similar custom upgrade programs with success.
• Photograph the entry of your community and your competitors’, and compare them.  Make yours more inviting.  Look at your advertising.  How does it stack up against your competitors?  Do you sound different?  What do you offer that they don’t? KEY: Are you advertising the floor plan with the highest availability?  Are you showing both photos of your community, model and lifestyle photos, or are you showing the same thing as the competition?
• Have you tried offering an incentive (i.e. a washer/dryer, ceiling fan, upgraded fixtures, crown molding and so on).  The best incentives are stay with the community long after the resident is gone, and create added value in the long run.

Determine if you have a leasing problem or a marketing /advertising problem.

Don’t let the formulas scare you.  Once you’ve filled in the blanks, you’ll find the process to be fairly straightforward:

Objective: To reach your leasing objectives, they must be qualified in terms of numbers, time to lease up, and people.  Complete the information below to determine your objective.  Remember to be realistic.

Leasing Objectives

Number of occupied apartments desired (ex: .97 x NO. Units)               __________________

Number of apartments currently occupied                                        -_______________

Pre-leased (vacants and on-notice)                                                              -_________________

Subtotal additional apartments needed                                             =_______________

Estimate Skips                                                                                        +_______________

Current Notices                                                                                      +_______________

Estimated Canceled preleased apartments                                      -_______________

Lease expirations                                                                                  +_______________

Lease renewals expected (include residents going month to month)           -_________________

Subtotal number of new leases needed                                           =_______________

Estimated canceled and rejected leases                                           +_______________

Net Total Number New Leases Needed                                            =_______________

Traffic Needed to Reach Objectives

Leases needed ¸ closing ratio = traffic needed to reach new lease goal.

____________________ ¸ ___________________ = ____________________

* Average closing ratio including unqualified and cancels

Note:  By increasing the closing ratio, you will be able to decrease the amount of traffic necessary to meet the objectives.  This greatly saves your marketing / advertising dollars.

Rentals Per Leasing Professional Number of new leases needed per month                                                                                                             ________________

Number of leasing professionals                                                        ¸________________

Number of new leases needed per month,

per leasing professional                                                                   =_______________

Leases needed per week (¸ 4.3)                                                         =_______________

Telephone To Traffic Ratio

Total appointments kept ¸ total phone calls = Telephone to Traffic Ratio

____________________ ¸ ___________________ = ____________________

* Goal = more than 60% of all appointments kept

* Goal = 25 -50% of closing ratio

Cost Per Traffic & Cost Per Lease

A. Monthly or weekly cost of a specific media or traffic source ¸ traffic generated by _____

this source = cost per traffic

$______________ ¸ ____________ = $ ____________ Cost Per Traffic

Monthly or weekly cost of specific media or traffic source ¸ total new leases

generated by this source = cost per lease

$______________ ¸ ____________ = $ ____________ Cost Per Lease

B.  TOTAL of all Traffic Sources expenditures ¸ total traffic = average cost per traffic

$_____________ ¸ ____________ = $ ____________ Average Cost Per Traffic

TOTAL Traffic Sources expenditures ¸ total new leases = average cost per lease

$_____________ ¸ ____________ = $ ____________ Average Cost Per Lease

Do you need to increase traffic?

• Pull your last two weeks worth of guest cards, and call each and every one.  Tell the prospect that you’re conducting a third-party audit of the apartment shopping experience, and need to ask them three quick questions.  Promise that you won’t take more than a couple of minutes of their time.  The questions we ask are:1.  Have you made a decision on where you are going to move, and if so, why did you select that community?  (If they say that they’ve chosen your community, community, thank them, set an appointment for the signing of their lease if needed, and move on to the next person.) 2.  Did you visit _________ apartments (your primary competitor), and if so what did you think about the community?  Is there a specific reason why you’ve decided not to lease there?
• Invite local businesses to attend resident functions.  This increases your word-of-mouth referral network by leaps and bounds.
• Beef up your resident referral program.  If you have a referral program in place, sometimes all it takes is a well-designed flyer to remind residents of it.  If your program has grown stale, give it a fresh twist.  If you don’t have a referral program in place, get busy!  (If you’re considering offering cash rewards, make sure they’re legal in your area, but please consider that there are plenty of great alternatives to cash or rental rate rewards!)
• Make marketing calls.  I highly recommend that you not only call on the Human Resource Departments of local employers, but that you also take time to introduce yourself to the receptionist. She knows everyone in the office and everyone communicates with her on a daily basis. And these are usually the people that everyone turns to for information when they’re new to the company.  Establish a long-term program that keeps you in touch with these valuable people.  Once a month, deliver donuts, cookies, candy, flowers or some other small gift to the receptionist that she/he may share with the rest of the employees.  Include a friendly note with a few business cards enclosed for them to pass along.

Increase Closing Ratios!

• Provide continuous motivation for Leasing Professionals to stay focused on the goal (i.e. charts, graphs and incentives placed where all can see).Extend office hours and raise bonus amounts for leases closed during a specific timeframe.
• Establish a rotating bonus plan based upon leasing certain apartment types.  For example, “All A-1’s leased this week are bonused at $100!”  I typically select the apartments that have either been vacant the longest or have the highest availability. Establish team goals with bonus incentives.  Any opportunity to foster teamwork is too valuable to pass up!
• Bring in your company’s very best leasing professionals to obtain their perspective. Have everyone shopped, and review the shopping reports carefully to apply training where needed.
• Provide weekly articles of interest that focus on overcoming concession objections and closing.  I faxed our community a new article every Monday morning.  Keep the tone encouraging and motivational.
• Ask yourself this: If you increased the closing ratio by ___%, how much more traffic would you need to reach the desired goal?  Is this possible?  Can you generate that much traffic? Can you handle that much traffic?  Here’s my “Feasibility” worksheet:

Traffic Increase Feasibility

Ÿ    Is the number of leases needed per month significantly higher than current performance?

Ÿ    How much more would traffic have to be increased if closing ratios remained the same to equal the needed goals?

Ÿ    Needed leases goal.  Current closing ratio _____ = _____ new amount of traffic needed less current amount of traffic _____ = _____ amount of extra traffic needed.  Is this possible?__

Ÿ    How much more would closing ratios have to increase if traffic remained the same to equal the _____ needed leases goal?____________________________________________

Ÿ    Needed leases goal _______ ¸ current traffic _______ = new closing ratio needed _____.  Is this possible?___________________________________________________________

Ÿ    What is the monthly goal per leasing professional?__________________________

Ÿ    How does this compare with current performance levels?_____________________

___ __________________________________________________________________

__ __________________________________________________________________

__ __________________________________________________________________

Ask yourself the big question.

Finally, when all is said and done, ask yourself whether it’s really necessary to give away such a valuable commodity as the opportunity to live in your community, not to mention cutting profit from your bottom line!  In light of all of the other things that you can do to increase traffic, better motivate your staff, and gain a profitable long-term advantage, should you really give in?

My answer was a resounding (brace yourself), “Yes!”   As sick as it made me, I made the decision to give concessions. I actually get chills as I sit here and write this.  Can you guess what happened next?  As a result of my decision to first consider all of the above, and then give in to concessions, leases increased -- by leaps and bounds!  The on-site staff is more aware of the competition, more motivated, and more skilled at closing than ever before!

The decision to give away rent took me five to seven months to make.  What if I had to do it all over again?  I’d follow all the same steps that I took, but I’d do it faster.  I should have made the decision to offer concessions about two months earlier than I did, based on my lease-up schedule.

What else have I learned?

1. We could never have truly known whether or not we could have leased-up without concessions if we didn’t try to avoid them in the first place;
2. The staff became a powerhouse of product knowledge!  They were more educated than ever before about our product and our competition;
3. Our competitors thought that we were crazy (actually, they thought that I was crazy, and pitied my staff), so we were easily dismissed as viable competition.  Now, because we tried it the hard way first, they realize that we’re a force to be reckoned with.  They knew that we don’t offer concessions as standard practice, and that when we do, they’d better jump!
4. If you have to give something away, ask for something in return.  Along with the free rent, we asked the resident to sign a paying lease term of either six months or one year.  In other words, their free rent period, although covered under the lease, was not included when the lease term was calculated.  For example: with one month free rent, the lease term was 13 months.  This enabled us to get full years collection of rent without increasing our operating expenses the next year.  If you don’t do this, (as you may be aware), your turnover expenses are divided into 11 months instead of 12, so the concession actually costs you more than a months’ rent. Note: Alica and Derek this is why I asked you to read Lease Renewal Strategies that Help You Manage and pay close attention to staggering leases by apartment types.
5. Cover your bases.  As even further protection, we asked the resident to sign a concession agreement, stating that if their lease is broken for any reason, the entire amount of the concession is due and payable.  Where the lease terms and conditions are met, there is no liability.
6. Sometimes it makes sense to spread the concession over the first six months of the lease.  We did not use this method, but I have heard of many companies that have used it with success.  I think it’s a great idea, where the market is receptive to it.  Because we decided to offer concessions in order to be competitive, we had to also consider that part of our competitive edge involved how and when the concession was delivered.  In our case, the market was most receptive to a one-time offer; and you’ll find this to be true in many areas where residents view the concession as a welcome means of offsetting moving expenses – but I think the six month idea is a great one if you can pull it off.
7. You really can increase rents even though you are offering concessions.  In fact, it’s probably easier to increase rent in some places, where the market is focused on the short-term benefit instead of the long-term effect. This rings especially true when you are offering the better product.  An apartment community in Dallas leased 100 plus apartments (70%) in two months by giving away 1.5 months’ rent.  Unfortunately, they didn’t increase the rents while doing it, not to mention that they weren’t under the gun because they didn’t even have the apartments out of construction yet.  Don’t miss the opportunity to raise rents when offering concessions, whenever you can do so sensibly.
8. If you are offering concessions and decreasing your rents at the same time you had better have done all of the above and make absolute certain you are handling each and every unit type and floor plan on a unit by unit basis and monitor it with every single new rental.

After all was said and done…

I know your burning questions are (1) how did the community manager feel about the entire experience, and (2) what kind of concession did we finally settle on.

Lori’s last words were “I have learned a lot!” When asked if she would do it all over again, her response was “People can’t believe that we leased all those first apartments without concessions, but I would give the concessions the next time around instead of waiting until we had vacancy loss”.

As for our decision, we first decided to offer the market standard one-month free on a one-year lease, and 2 weeks on a 6-month lease.  We quickly adjusted that to $500 on a 6-month lease and $1000.00 on a one-year lease (which is less than a half a months’ rent and a months’ rent, respectively).  We only offered concessions only on floor plans with the highest availability.  In addition, and this is key, we continue to adjust our rents upward as we leased apartments (see #7 above). We actually charge more for a one bedroom floor plan then we did for a two bedroom floor plan.

If you’re caught in the concession trap, or even considering giving in to it, please take the time to consider the HOW, WHAT, WHEN, and WHY of it all before you follow your competition over the rail of that proverbial bridge!  Depending upon your own unique situation, there is either an economically smart way for you to avoid concessions, or to offer them wisely.  I found my answer, and so can you!

The Multifamily Firm That Does Not Adhere To Technological Advances Is Making A Costly Mistake.

Let’s face it; you’re not the only game in town.
There are apartment communities all over and they may even be right next door.  So why should the prospective resident pick your property to be their new home?  That’s a good question, but it’s the job of you and your staff to insure that everything possible is done to capture that future resident before your competition does.
Let’s walk through the process.  You do all the right marketing. You get your community looking at its very best.  You train your staff on how to look and act professional.  You train them on phone etiquette and how to tour.  Then you wait for the phones and e-mail leads as well as all the walk-ins to start coming in.  But then what?
What happens once a prospective resident does reach out to you?  Are these leads being handled as aggressively as they should?  If you’re looking at the industry statistics, the answer is NO!  It’s a pathetic but true fact that the valuable leads you are paying dearly for are probably not being handled the way they should.  In an article written by Kate Good (Out of Patience: Confessions of a Cyber Shopper), Kate states that “Over 50% of the internet leads we send out at Net Mystery Shopper go unanswered.”  Just as alarming, three out of ten phone leads are missed altogether.
So is it a staffing problem, not hiring the right individuals or something else entirely?
The standard onsite leasing office employs about 1.5 agents per 100 apartment homes.  These exhausted individuals must handle every call, visitor, and transaction related to the community.  And when the economy takes a downturn, reducing the number of employees in an attempt to cut costs makes the leasing consultant’s job even more demanding.
It is common knowledge that potential renters that call before visiting are more likely to sign a lease than those who simply drive by. But with fewer staff members to handle these leads accurately, many fall through the cracks. Rather than increasing occupancy and revenue, companies are just trying to stay afloat.
In addition to the demanding workload, a leasing agent needs to accurately record all customer information from the phone, Internet, e-mail, and in-person interactions.  This information is not only crucial but it is paramount to a company’s success.  In today’s busy market with intense competition, the guest card becomes one of our most important tools.
Unfortunately all too often the agent is more focused on other things and not maintaining accurate records.  Historically, more than 60% of all customer contacts never even make it to a guest card.  And of the ones that do make it, only one-third accurately identifies the ad source and contact information.
Just as important as accurate data is proper follow-up. Toni Blake, the multifamily industry’s Marketing Guru, emphasizes that follow-up starts with getting accurate and key information onto a guest card.  She has found that leasing people who understand the importance of the guest card out-lease their counterparts three to one.
J Turner Research Firm found consistent findings.  In a recent survey, 65% of top apartment executives said they were going to improve Lead Follow-Up when asked what techniques they would use to secure a potential resident.  Another survey titled Industry Outlook for 2009 listed insufficient follow-up as the number one reason for not closing a lease.
Inaccurate Data = Lack of Follow-up = Lost Leads = Lost Revenue
If you are really serious about improving your lead management skills and maximizing the potential of your leasing staff, and you should be, then you will most certainly need the help of automation.  The bottom-line is your community most likely does not need more leads—it just needs to do a better job maximizing the leads they already have.
Studies have shown that the fastest way for any company to increase profitability is to provide its people with the proper tools, training, motivation and feedback to enhance their performance.  Communities have to take advantage of the technology available today to be able to effectively capture and convert traffic to leases.
Here's where concepts like Customer Relationship Management (CRM) and sophisticated online lead-tracking solutions become significant to the property management companies.
Improving productivity is derived from Internet-driven technology.
Today, Internet-driven technology such as the PopCard, created by Lead Tracking Solutions, can consolidate the entire guest card process creating valuable information that will in turn increase occupancy and revenue for a property to succeed.  Productivity-wise, this consolidation of information will do to the multifamily business what the assembly line did to automobile manufacturing.  And, if implemented wisely, the cost of this technology is quickly covered many times over by the resulting synergy—and the quantifiable savings—that it brings to the property, regardless of its size. A company that does not embrace technology will prove to be a costly mistake.
The PopCard is a follow-the-lead program that provides immediate tools to automate, integrate, manage and evolve your prospect and resident communications quickly and cost-effectively for strategic advantage.  All marketing calls and e-mails—even if the call is missed—¬will auto-populate a guest card for the leasing agent letting them know exactly who is contacting them, where they are contacting them from, from what phone number or e-mail address, and from which advertising source.  Along with this vital information, it also acts as a guide for your leasing agent insuring that you are maximizing their true potential. Of course all of this would not be complete without seamlessly integrating with your back-end software which the PopCard does as well.
Clearly, the phrase "Half the money I spend on advertising is wasted; the trouble is I don't know which half." no longer holds true.  The internet and advancing technology offers extraordinary tools for knowledge – right down to the last penny.  Multifamily owners can maximize their employee’s performance and get accurate data by using innovative technology such as the PopCard which will undeniably provide an extremely beneficial map to marketing and employee success.
If you would like further information regarding the PopCard, contact Brian Maguire, Vice President of Sales for Lead Tracking Solutions at 866-209-1700 x104 or email to BrianM@LTSTeam.com.

Note from Tami to multifamily friends: Are you maximizing the use of technology? Please Take a quick  15 question 2 minute survey here

(And Other Soft Market Tips)
By Doug Chasick, CPM®, CAPS, CAS, Adv. RAM, CLP, SLE

Here’s a PROVEN strategy to deal with Resident turnover in a soft market. I’ve used it many times and it has always worked better than sending out renewal letters when my market disappeared! This idea is based on my belief that there are two kinds of Residents who move: those who have to, and those who want to.

1. Residents who move due to necessity (job, marriage, divorce, financial condition change, roommate add/subtract, buy house, etc.), are going to move – no matter what you say or do – because they have no choice. Stop trying to “save the notice” and do whatever it takes to make their move as stress-free as possible. It’s your last chance to let them leave with a good impression of you and can result in referrals to you later on!

2. Most Residents who don't have to move due to necessity aren't really aware that their lease is expiring until we tell them it is - with our array of 120/90/60/45/30 days prior-to-lease expiration letters. The Residents who want to move because they can’t stand living somewhere know exactly when their lease expires. They’re marking the number of days left on their lease on the living room wall, the way prisoners do in jail!

So, in a soft market, where concessions and specials abound, most people who are reasonably happy with where they are currently living do not peruse the real estate section. They’re not reading the various specials, because they aren't thinking about moving. If we don’t send them a renewal letter or notify them that they are now month-to-month Residents (the other part of this strategy is that we do not send them a MTM letter and we do not charge them a MTM fee), in almost every jurisdiction, under the Landlord Tenant law, the lease will automatically convert to a MTM lease. The only real reason to send them a MTM letter is to be entitled to collect MTM charges and to notify them that we are/will seek relief under any holdover tenant provision. So, the majority of Residents will stay put, paying their rent each month and living their lives.

When the market "comes back", we now have the ability to raise rents to whatever the market will bear with a 30-day written notice to all of those MTM Residents. If we had followed "conventional" property management procedure, we would have signed new, one-year leases with all these Residents at depressed rental rates (possibly with renewal specials), and we would have to wait for their lease expiration before we could take advantage of the stronger market. Plus, we could have forced turnover by "telling" the Residents to shop around for the best deal.

While I don't have any "hard" statistics for this since I leave all of that stuff at whatever company I was working for at the time, I can tell you that it works. In the approximately 16 years I have been using this strategy, I have always had less turnover during the "no renewal letter" period than in the rest of the year; my occupancy was higher than my comps without specials; and when the market came back, we realized significant (15 - 25%) rental increases even if I had to force turnover, eat the turn costs and some vacancy - or, if the Residents just stayed put and signed the new one-year lease at the current market rate. Try it. What have you got to lose? It really works!

Some other thoughts about succeeding in a soft market:

1. It’s the service, stupid! The three most important aspects of real estate will always be location, location, location – and the three most important reasons to renew are service, service, and service. Let’s focus on maintenance service for now: Are you A) Taking care of your Residents the way they want to be taken care of, or are you B) Twisting and squishing and otherwise reshaping their requests so that it fits your policies and procedures? If you chose “A”, you’re on the right track; if you chose “B”, read on . . .

Do you have a Service Tech who works on Saturday? How about several evenings a week? Automobile dealers discovered this a long time ago. Some of the dealers near me have Service Departments that are open Saturday and Sunday, as well as being open until 9:00 PM or 10:00 PM each weekday evening. Why? Because that’s the only time many of their customers can come in to get their cars serviced! “Oh, but Doug, the apartments are right here – the Resident doesn’t need to go anywhere, and nobody has to be home and we don’t do appointments and I can’t afford overtime and blah, blah, blah…”

Call me wacky, but most Residents want to be around when someone is in their apartment, even if we think that’s silly or inconvenient. We may have the right to enter without their presence; but when our Residents aren’t happy, they have the right to move. Follow the Platinum Rule: do unto others as they want to be done unto. Schedule a Service Tech to work Tuesday through Saturday. Schedule a Service Tech to work from noon until 8:00 PM two or three days a week. Accommodate the wants and needs of your Residents and they will stay put!

2. Beauty (and service) is in the Eye of the Beholder (or, You Can’t Manage What You Don’t Measure). How do you know when you are doing a good job? Actually, have you defined what a “good job” is, as far as Resident Retention is concerned?

• Do you measure the percentage of expiring leases that renew?

• Do you factor in how early they renew – 90 or 60 days out vs. the day before the lease expires?

• Do you factor in the amount of the rent increase vs. the value-added (stays with the property) renewal bonus or renewal concession?

• Do you keep track of whether they called you before you sent out the first renewal letter (they love it so much they want to make sure they don’t miss their renewal), or how quickly (or even if) they reply to your renewal invitation(s)?

• Do you review their service request and general complaint history and the completion/resolution satisfaction rate?

• How often do you talk to your Residents when you aren’t trying to renew their lease or collect their rent – do you call them after a service request is completed?

• Do you make NAR (No Apparent Reason) calls? If you schedule 5 to 10 each day, just to say “Hi” and find out if they need anything, you can end up talking to each Resident 4 – 8 times a year!

• Are you using “Rate Our Maintenance” cards? Yes, using, them – not just attaching them to service requests, but following up on each one, enrolling your entire staff to encourage Residents to return the cards, and recognizing service delivered at the level you have established.

• Are you USING “Rate Our Service” cards for the office staff? Wanna be really bold? Call these “Are You Getting Your Money’s Worth?” cards, and read the responses. If you want people to renew their leases, their responses on these cards will become your road map!

People who have a choice of staying or moving will stay put when they are getting their money’s worth, when they feel special, when living at our property saves them time, money and aggravation, and when they enjoy interacting with you and your staff. We know why they move and why they stay; so why not establish specific performance thresholds? Meticulously measure your actions and refine your policies, procedures and techniques to produce the results you know you need to keep your Residents happy.

Now, let’s get to work!

Douglas D. Chasick, CPM®, CAPS, CAS, Adv. RAM, CLP, is , Chief Learning Officer, and Senior VP, Multifamily Professional Services, CallSource.

I doubt anyone in this industry can say that they haven’t felt the effects of the recession. It has dominated discussions and educational sessions in our industry for the past several years. The recession has been described as difficult, challenging, and even devastating. Our current economic conditions have trained our focus on selling with concessions and renewing leases without rental increases; but it’s only a matter of time before those conditions come to an end, enabling us to refocus our teams on strategies that are tailored for the turnaround. It’s time to transition out of the recession and begin leading our teams toward recovery.

During these difficult years we have also experienced a heightened awareness of the way people shop for an apartment and the tools/websites they use to complete their research and the way our residents choose to communicate their feelings about us. Our economy is showing signs of recovery, so the time to prepare is now! It’s time to train our people with the techniques they’ll need for the recovery, including proven strategies that focus on selling without concessions, retaining residents by building better relationships and improving our reputations for value and service, while increasing rents without losing residents.

The way we lease, market and manage our communities was changing long before the recession came along; but I believe that the recessions’ silver lining has been a heightened awareness of the information, tools and resources that are available to us. The recession forced us to open our eyes and look at every aspect of what we were doing on a daily basis. This recession will not last forever. One day soon, we’ll wake up and the recession will be nothing but a memory. If you act expeditiously, you will be able to capitalize on the opportunities that the recession has created.

The recession that we are currently emerging from continues to present what may be the greatest opportunity we’ll have to advance our companies and communities, accelerate our strategies, and gain significant market share over our competitors. There are several reasons why I believe this to be true:

It’s all about the way we think and see. If we can open our eyes to see the opportunities of the recession—or any other circumstance for that matter—we can take advantage of it. We need to make the recovery work for us, and here’s how:

A few very simple things that we all need to start doing today to overcome the situations we have created by offering the concessions that have contributed to the lower perceived value of our communities are:

There are many companies that have embraced the recession as an opportunity to both grow and succeed rather than as a time to hunker down and take cover. We have strategized our way through these challenging situations, and now it’s time to think about the transition and the opportunity it presents to retrain, refocus and reinvent the way we play the game.

Over the next two weeks, because we feel that many markets are starting to move in a direction that requires thinking about and retraining our teams, we're going to help prepare you with renewal strategies that will support raising rents without losing residents. While you're turning your thoughts toward retention/renewal, here are a few Multifamilypro products that we think you may find of help in focusing your residents' attention on the value and services your community provides!

To view our Healthy Choices line of door hangers and other products, CLICK HERE!